Plan Backed by Thompson to Invest in Northern Ireland Ended at a Cost

August 5, 2013

Gotham

By MICHAEL POWELL

It sounded like a perfectly grand idea.

In April 2008, the New York Citycomptroller, William C. Thompson Jr., as investment officer for the city’s multibillion-dollar pension funds, stood shoulder to shoulder and beaming with the Protestant leader Ian Paisley and the Catholic leader Martin McGuinness and announced that the city would pour $150 million into once war-torn precincts of Northern Ireland.

It is, Mr. McGuinness said, “the ordinary people of the United States investing in the ordinary people of the North.”

Or not, as the case turned out.

Twenty months later, not a penny of that pension money had been invested in Northern Ireland. The new comptroller, John C. Liu, decided to pull the plug on the investment in January 2010.

The highly unusual decision to shut this ballyhooed investment fund carried a cost. The city paid a $3 million management fee to Emerald Infrastructure Development Fund, the little-known group of investors that had been chosen by Mr. Thompson’s office to invest in Ireland. And Emerald Infrastructure, in turn, paid $250,000 of the city’s money to William Howell, an old friend and generous campaign contributor to Mr. Thompson.

Mr. Howell served as the deal’s placement agent, or in less polite parlance, the fixer. He brought money managers who wanted a slice of city and state pension business together with pension trustees and arranged fine talks over finer lunches and dinners. In 2009, New York City banned the use of placement agents after repeated scandals.

A journalist, Tom Robbins, unearthed Mr. Howell’s small but lucrative role in The Village Voice in 2009. At that time, Mr. Thompson expressed surprise at his old friend’s good fortune. “I knew he had an involvement,” Mr. Thompson said. “I just didn’t know he was the placement person.”

Mr. Thompson, who is running for mayor, plays up his role as steward of the city’s money. In a long career in politics, his tenure as comptroller offers the best chance to draw his measure as an executive. Mr. Thompson took a personal interest in the Northern Ireland deal and helped shape it over the course of two years.

He argues, through a campaign staff member, that the deal foundered because the Irish economy imploded in 2008. Mr. Thompson, staff members said, was just one of more than 30 officials who signed off on the deal.

This is, perhaps, too neat a sidestep. Mr. Thompson was the chief investment officer for the city. Pre-eminent among officials, he was responsible for guiding pension investments.

And you wonder about the quality of his memory. Mr. Howell accompanied Mr. Thompson to Ireland in 2006, in what was essentially a dry run for this deal. And Mr. Howell sat in on some of the comptroller’s discussions.

Back in this country, when Mr. Thompson’s staff first crafted this deal, Mr. Howell was listed not as a placement agent but as a full-fledged partner in Emerald Infrastructure Development. That offered him a gilded path to many millions of dollars if the project was a success.

Mayor Michael R. Bloomberg has a vote on the pension boards, and his staff objected. Mr. Howell, they noted, brought no investment expertise to this deal. “For Howell to get compensated as though he were a general partner raised some red flags,” Francis Barry, a spokesman for the mayor, said Monday.

Emerald Development Managers, which ran the investment fund, sent several responses on Monday. At first, the company stated that Mr. Howell had no affiliation with it. Later, it acknowledged, the proposed deal had “originally classified Mr. Howell as a partner.”

Mr. Howell did not return several phone calls. A long-ago aide to Mayor Edward I. Koch, Mr. Howell has worked in finance. New Mexico officials have sued Mr. Howell and other placement agents, charging that they unjustly enriched themselves in a pension-placement scandal.

Like clouds on a mountaintop, more mysteries cling to this Irish investment project.

This promised to be a difficult investment. There was a fragile peace, and investment, in green energy, in waste treatment, and infrastructure, was needed. And corporate taxes across the border in Ireland were less than half those of Northern Ireland.

For this project, Mr. Thompson’s office recommended choosing a firm, Emerald Infrastructure Development Project, registered in the Cayman Islands and formed specifically to grab this investment contract. The chief executive officer, Neil L. Cohen, ran a small investment firm in the 1990s and helped found American Rock Salt, which delivers quite a bit of the rock salt used during New York City’s winters.

Mr. Thompson’s campaign lauded the principals of Emerald for their experience in “complex structuring of project finance.” Neither the campaign nor Emerald, however, provided examples of that expertise.

But none of the principals had much experience investing in Northern Ireland. City officials say that Emerald’s original proposal did not even include an office in Northern Ireland.

Emerald’s founders, however, were shrewd in their pursuit of the city’s business. Mr. Cohen, Mr. Howell and another partner each gave $25,000 that year to the Ireland Funds, an influential American organization that promotes investment in Ireland, according to The Detail, an investigative publication in Ireland.

Officials with the Ireland Funds did not return phone calls.

In 2008, Mr. Thompson stood between Mr. Paisley, the Ulster loyalist, and Mr. McGuinness, the former Irish Republican Army chief, and said, “They asked me to help.”

So he took ownership. The tricky part is the responsibility that comes with it.